Friday Fave: Blockchain – Reaping the benefits or going cold?

This week the Australian Digital Transformation Agency (DTA), a federal government initiative, has been investigating blockchain and the potential for government use, the benefits, the maturity of the technology and willingness to adopt. Chief Digital Officer Peter Alexander reports that the technology is yet to prove its worth. Their recommendation:

“…that blockchain is at the “top of a hype cycle” and is currently less effective than other existing technologies in delivering government services.”

Although not ruling it out for future use, they believe the current hype is being fueled by big vendors and not users and deliverers of service. The announcement cites a number of reasons including the lack of standardisation of the technology, the anonymous nature and lack of trusted relationships.

Overall, I’m disappointed and somewhat dismayed by their position. The interest and uptake globally, by large companies and governments, is beyond hype. I have written previously about blockchain being adopted in Catalonia and am involved in research studies with the Blockchain Institute of Technology in Barcelona. Reflecting on the DTA decision, I found an article from Deloitte that framed the challenges ahead for blockchain adoption and perhaps provide some insight into how the DTA has arrived at their conclusions.

The key issues identified in the article may underpin some of the DTAs concerns: at the moment, the processing of transactions is comparatively slow compared to current systems; lack of standards and interoperability between blockchain platforms; the ability to integrate or connect with existing enterprise systems; and the regulatory concerns such as privacy and enforceability of contracts are all inhibiting widespread adoption. If you take these issues at face value, you could also arrive at the same conclusions as DTA. But, do you remember when the internet and email were first introduced?

The Deloitte article identifies five key vectors of progress that blockchain will need to address to increase adoption:

Increase in transaction speeds;

Standards and interoperability;

Ease of implementation;

Regulatory advancements; and

Expansion of consortia.

The article expands on each of these vectors to provide visibility on what progress is being made to address these issues.

To ignore blockchain and its future potential is similar to the flat-earth movement. It’s early days, but many organisations and governments globally have well-advanced initiatives that will enable their ability to scale projects and policies quickly to readily incorporate the new processes. It looks like Australia may not be one of these.